What is recruitment process outsourcing?


Recruitment process outsourcing is a business model where companies outsource some or all of their recruitment processes to an external service provider.

Recruitment process outsourcing is a business model in which organisations transfer some or all of their recruitment processes to an external service provider.

RPO providers are typically third-party firms that take on the responsibility of managing the end-to-end recruitment process on behalf of the client company. This can include activities such as candidate sourcing, CV screening and assessing applicants, conducting interviews and managing the hiring process.

Clients may opt for a full-service, function-based or on-demand RPO provider depending on their goals and specific recruitment requirements.

  • Full-service RPO providers offer a comprehensive solution, managing the entire recruitment process for the client organisation. They take on end-to-end responsibility for all recruitment activities, from sourcing and screening candidates to onboarding.
  • A function-based RPO provider focuses on specific segments or functions within the recruitment process rather than managing the entire process. They typically specialise in one or a few recruitment functions or departments and offer targeted solutions.
  • An on-demand RPO provider offers organisations the flexibility to outsource specific recruitment needs or handle recruitment spikes without committing to a long-term, comprehensive RPO engagement.

RPO providers are sometimes confused with managed service providers (MSP). However, managed service providers only oversee their clients’ contingent workforce needs, and therefore differ from their RPO counterparts.

History of recruitment process outsourcing

The concept of recruitment process outsourcing began to take shape in the early 1990s as companies started to realise the challenges of managing their recruitment processes in-house. By the late 1990s, specialised recruitment firms providing outsourced staffing solutions began to emerge.

As businesses continued to face difficulty in attracting and retaining skilled talent in the early 2000s, the RPO industry gained traction. The dot-com crash and a shifting labour market prompted organisations to seek more efficient and effective ways of hiring. The RPO model evolved soon after, offering end-to-end recruitment solutions that encompassed everything from sourcing to onboarding.

During the global financial crisis of 2008, some companies scaled back their outsourcing efforts due to economic uncertainty, while others recognised the cost savings and efficiency gains associated with RPO and continued using their recruitment process outsourcing provider.

As the economy recovered, RPO providers expanded their services to address a broader range of talent-related challenges, including employer branding, candidate experience and workforce planning. Since then, the RPO industry has continued to evolve and mature, becoming an integral part of strategic workforce planning for many organisations.

Recent trends in recruitment process outsourcing

Today, RPO providers have adopted advanced technologies such as artificial intelligence, data analytics and automation to enhance their services and deliver more accurate and efficient recruitment solutions. These technologies enable better candidate matching, predictive analytics for sourcing and data-driven insights for improving recruitment strategies.

In recent years, demand for specialised skills in industries like STEM has driven the growth of RPO services catering to these sectors. The Covid-19 pandemic has also led to further interest in recruitment process outsourcing providers.

With the rise of hybrid and flexible working stemming from the pandemic, paired with the Great Resignation’s impact on talent supply, both employers and RPO providers have had to rethink their recruitment strategies. This has involved catering to employee preferences in terms of when and where they work, seeking out a broader, more diverse range of workers and looking beyond local boundaries and leveraging global networks.

Advantages of recruitment process outsourcing

  • RPO providers are recruitment specialists with in-depth knowledge of industry best practices, helping clients find the right talent faster and more efficiently.
  • Recruitment process outsourcing eliminates the need for internal HR teams to manage recruitment, saving on recruitment-related costs and reducing time-to-hire.
  • RPO solutions can be scaled up or down based on hiring needs, providing flexibility during peak or slow recruitment periods.
  • RPO providers often have a wide network, enabling access to a diverse talent pool, including international candidates.
  • RPO providers enhance candidate engagement and experience through personalised interactions and efficient communication.
  • RPO providers offer performance metrics and reports, providing insights for continuous improvement.

Disadvantages of recruitment process outsourcing

  • Handing over recruitment processes to an external provider may lead to a perceived loss of control over hiring decisions and candidate quality.
  • While RPO can save costs in the long run, the upfront cost of outsourcing might be higher than maintaining an internal recruitment team.
  • As they are working separately, there could be a lack of communication between the RPO provider and employer. Such communication lags could lead to misunderstandings or errors.